Auto loan applicants with problem credit need to understand that getting turned down even for a subprime car loan does not always mean that this is the end of the road
What we know
Here at Auto Credit Express we can understand how getting turned down for a high-risk car loan can be discouraging for most applicants because we've spent the past twenty years helping these buyers find those new car dealers that can give them their best opportunities for car loan approvals.
We also realize that while not every loan application gets approved, getting denied for an auto loan doesn't necessarily mean the end of the road for many consumers with questionable credit.
So, how hard is it to get a car loan with bad credit?
There's really no simple answer to that question and here's why:
Looking at it objectively, the higher-risk car loans process is a form of negotiation. While these applicants may believe that once they're turned down because of their credit situation that there's nothing else that can be done, in many cases they were turned down simply because the lender couldn't approve the loan in the form in which it was submitted.
First of all, there are a number of approval killers for these types of auto loans. And while they're not automatic rejections from all lenders, most typically include one or more of these situations:
• Applicants currently in credit counseling
• Applicants with a dismissed bankruptcy
• Applicants with a credit history that includes multiple repossessions
• Applications with a credit history that includes multiple bankruptcies
• Applicants with a credit report showing past due child support
• Applicants with a credit report showing excessive tax liens
Keep in mind that high-risk lenders generally look for ways to approve a loan application, but the real key is that the applicant and the deal somehow have to fit within their approval standards. It should also be pointed out that these lenders are used to seeing rough credit, so they place less emphasis on credit history (other than one or more of the above issues) and, instead, concentrate on other factors.
Here are four adjustments that, if implemented, might possibly reverse a negative credit decision from a bad credit lender:
1. Review your credit report. Although the effects of any changes you might make are usually not immediate, go over the entries and notify the credit bureaus, using their correction processes, if you see any information that might result in a lower credit score. This is also why it's important to request copies of your reports before applying for a loan.
2. Consider a less expensive vehicle. It could be that the car you picked out fits the lenders parameters but, after reviewing the applicant's credit history, employment or residence stability (or other factors) the lender believes it's still too much car. Ask the lender if switching vehicles would help.
3. Increase the down payment. If you can come up with it, ask the lender if a larger down payment would help your cause. Higher-risk lenders thrive on borrower equity and large down payments have been known to cure any number of credit shortcomings.
4. Add a co-signer. Someone living at the same address can add stability if their credit history is at least as good as or, better yet, even better than yours. Keep in mind that unless this person is your spouse, their income and debt must also qualify them for the loan. That's because you will both be held jointly and individually responsible for it and someone other than you husband of wife can co-mingle their income with yours.
As we see it
Rather than giving up, applicants should view a loan denial as an opportunity to explore alternative solutions to this credit dilemma. In particular, there may very well be a number of other options other than a BHPH car dealer.
There is one more thing: if you've experienced car credit problems in the past, we want you to know that at Auto Credit Express our specialty is helping credit-challenged consumers find those car dealers that can give them their best chances for approved car loans.
So if you're ready to reestablish your auto credit, you can begin now by filling out our online car loans application.